When the Supreme Court struck down the Affordable Care Act’s mandatory expansion of Medicaid by the states back in 2012, observers quickly began focusing on who would “opt in” or “opt out.” But from a purely budgetary standpoint, there was never any question that accepting federal dollars to fund 100 percent of that expansion and 90 percent thereafter was a no-brainer.
Studies from the Rand Corporation and others concluded that just saying yes to Medicaid expansion would add coverage for millions of previously uninsured, prevent thousands of needless deaths annually, help rescue financially-troubled hospitals in rural and poorer areas, and ultimately more than pay for itself as state costs for uncompensated care plummeted. (As the Kaiser Family Foundation and Kentucky Gov. Steve Beshear among others later reported, events transpired exactly as we foretold.) As Ezra Klein and Evan Soltas summed up the obvious opt-in case in June 2013:
So then, the math works out like this: States rejecting the expansion will spend much more, get much, much less, and leave millions of their residents uninsured. That's a lot of self-inflicted pain to make a political point.
Now, President Trump and Republicans in the House (if not the Senate) are pleased to perpetrate what might be the greatest act of political spite in modern American history. Replacing Obamacare with the latest incarnation of the so-called “American Health Care Act” (AHCA) wouldn’t just leave 24 million more Americans uninsured, 14 million from Medicaid alone. Trumpcare would simply shift about $880 billion in funding for lower-income and elderly health care to giving tax breaks to the wealthiest Americans. With its smaller, slower-growing tax credits, penalties on those failing to maintain “continuous” coverage, comically under-funded “high-risk pools,” and its green-light to insurers to charge older Americans much more than under Obamacare, Trumpcare guarantees poorer, sicker, and older people will pay higher premiums for insurance—if they can obtain it at all. And by letting states determine which—if any—of Obamacare’s mandatory essential health benefits (EHB’s) they will require, what Trumpcare calls “coverage” may no longer look like “insurance” in any meaningful sense of the word.
Not, at least, according to the nonpartisan Congressional Budget Office. For the CBO, many Trumpcare plans won’t count as insurance at all.
As Vox and The Hill among others reported in March, Republicans have been trying to reduce premiums by eliminating the ACA’s list of 10 mandated benefits insurers must provide. These provisions regarding prescription drug coverage, hospitalization, out-patient treatment, mental health care, pregnancy and maternity care, and much more not only set a baseline for insurance offerings under Obamacare, but also help spread the risk for insurers across a much larger pool of policyholders. The ACA also bans discriminating against those with preexisting conditions (estimated by KFF at 27 percent of those under age 64) and other insidious insurance practices like “rescission” (dropping policyholders when they get sick). Just as important, the ACA’s ban on annual and lifetime benefit caps has helped cut in half the number of personal bankruptcies due to medical debt. All of that, the CBO warned would-be Obamacare repealers in December, is a big problem as far as the agency is concerned:
CBO and the staff of the Joint Committee on Taxation (JCT) anticipate that insurers would respond to such legislation by offering new types of insurance products in the nongroup market, which are likely to differ from existing products in their depth and extent of health insurance benefits. If there were no clear definition of what type of insurance product people could use their tax credit to purchase, some of those insurance products would probably not provide enough financial protection against high medical costs to meet the broad definition of coverage that CBO and JCT have typically used in the past—that is, a comprehensive major medical policy that, at a minimum, covers high-cost medical events and various services, including those provided by physicians and hospitals…
If there were no clear definition of what type of insurance product people could use their tax credit to purchase, everyone who received the tax credit would have access to some limited set of health care services, at a minimum, but not everyone would have insurance coverage that offered financial protection against a high-cost or catastrophic medical event; CBO and JCT would not count those people with limited health benefits as having coverage.
For their part, CBO and the Joint Committee on Taxation (JCT) warned of the challenges they “would face in estimating the number of people who would purchase coverage in the nongroup market, and the scope of that coverage, under such proposals.” Larry Leavitt of the Kaiser Family Foundation helped explain why. Under the new GOP rules, insurers would doubtless create new plans under which premiums would come down.
But on the flip side, he wrote, insurance plans could become very skimpy, because insurers would be wary of offering generous plans and attracting only sick, costly people who were willing to pay more for them.
“With no benefit requirements, insurance policies could get quite skimpy. No insurer wants to be the one most attractive to sick people,” he wrote.
“With no required benefits, some (like mental health or maternity) would be very expensive because only people who need them would buy them,” he added.
To predict the results, you only need to go back to the future.
Jeanne Lambrew, one of the White House architects of ObamaCare, earlier this year pointed to a Department of Health and Human Services report from 2011 that showed how plans have changed.
In 2011, the report showed that 62 percent of individual market plans did not cover maternity care, 34 percent did not cover substance abuse services, 18 percent did not cover mental health coverage and 9 percent did not cover prescription drugs.
Now, Donald Trump, Paul Ryan, and House Republicans want to go back to the dark days before Obamacare when 50 million Americans were uninsured and 25 million more were “underinsured.” Between 2003 and 2007, the Commonwealth Fund reported, the number of "people who have health coverage that does not adequately protect them from high medical expenses" had skyrocketed by 60 percent.
But now with version 3.0 of the AHCA, Republicans are certain to add millions to the ranks of the underinsured and those without insurance at all. For starters, the MacArthur amendment proposed by New Jersey Rep. Tom MacArthur enables states to escape from Obamacare’s patient protections:
Under current law, insurers cannot discriminate against people with preexisting conditions, and they must cover certain “essential health benefits” — such as prescription drugs, pregnancy care, and hospitalization. The MacArthur Amendment, however, will allow states to “specify their own set of essential health benefits” at a lower level than the requirements set by existing law. And it would also permit states to obtain waivers that would allow insurers to charge more to many people with preexisting conditions.
Given the current occupant of the White House and the Republicans still occupying a clear majority of state houses, there’s little reason to doubt those waivers would be granted to end Obamacare’s essential health benefits and “community rating” requirement to charge all applicants within a given age band the same rates. As The Nation explained:
States could only get the waiver if they showed that their new plan would either “reduce average premiums, increase enrollment, stabilize the market, stabilize premiums for individuals with pre-existing conditions or increase the choice of health plans,” according to Politifact. But there’s enough wiggle room in there (after all, if you purge the sick from the health-insurance rolls, average premiums would indeed probably go down) that a state government friendly to the cause of dismantling Obamacare would surely grant the waiver.
Making matters worse, another amendment offered by Michigan Rep. Fred Upton would create a perverse incentive for states to seek those waivers by distributing a pool of $8 billion over five years to fund high-risk pools to help those denied coverage due to preexisting conditions pay the costs of higher premiums directly to insurers. But the past history of high-risk pools has not been a happy one, especially in states like North Carolina. Even if all $138 billion of AHCA funding for the states went to financing their high-risk pools over a decade, the Center for American Progress found, the states would face a staggering $200 billion shortfall. Well over half of CAP’s projected 1.5 million people seeking coverage under a high-risk pool would be left without insurance.
As bad as all of that is—and it’s very bad, indeed—Trumpcare would also undermine large employer-provided health insurance that currently covers some 110 million Americans. As Matthew Felder of the Brookings Institution warned, “Allowing states to define ‘essential health benefits’ could weaken ACA protections against catastrophic costs for people with employer coverage nationwide.”
In particular, a single state’s decision to weaken or eliminate its essential health benefit standards could weaken or effectively eliminate the ACA’s guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state.
Why? For starters, because “states are not allowed to regulate self-insured plans, which are shielded from state regulation by the Employee Retirement Income Security Act.” These now make up 70 percent of large employer plans, covering some 76 million people. As for the rest:
Current regulations and guidance permit large employer plans to apply any state’s definition of essential health benefits for the purposes of determining the scope of the ban on annual and lifetime limits and the requirement to cap out-of-pocket spending.
Under current law, allowing large employer plans this type of flexibility has limited impact since all states’ essential health benefit definitions are required to meet basic federal standards. But if each state could set its own definition of essential health benefits, as states would be allowed to do under the MacArthur Amendment, the consequences of allowing this flexibility would be significant…
In a more extreme, but still plausible, scenario in which even one state elected to completely eliminate its essential health benefit standards, the requirement to provide these protections would effectively disappear entirely for large employer plans nationwide.
Given that Republican Party that has advocated letting insurers sell across state lines for 25 years (something Obamacare allows, yet has seen few takers for), it’s hard to imagine the Trump administration pushing for rules to prevent the AHCA’s poison pill provision for workers at big companies crossing state lines, either.
So, the question remains: If Trumpcare becomes the law of the land, will many states respond by starting a race to the bottom?
In a word, yes. Because when it comes to limiting eligibility, slashing funding and curbing benefits for health care for their red state residents, Republicans’ past performance is a guarantee of future results. After all, health care is worst where Republicans poll best. But the gap has narrowed under Obamacare: as the Wall Street Journal reported Wednesday, “Top 10 States for Pre-Existing Conditions All Went for Trump.” Most of those refused to expand Medicaid under Obamacare and the one that did (Arkansas and Kentucky) have threatened to unwind it under their new Republican governors. Politico reported then-Gov. Rick Perry’s 2013 proclamation that the Lone Star State would opt-out of the Medicaid expansion that could have insured two million Texans:
“Texas will not be held hostage to the Obama administration’s attempt to force us into this fool’s errand,” he said, flanked by Republican Sens. John Cornyn and Ted Cruz and Reps. Joe Barton and Michael Burgess.
Four years later, Rep. Barton proudly predicted this week that history would repeat itself if Congress passed Trumpcare:
Representative Joe L. Barton, Republican of Texas, predicted his state “would lead the parade to opt out of all the federal mandates” in the Affordable Care Act.
In that case, the parade will include millions of Americans who lost their health insurance, and millions more left with insurance in name only.